Facebook’s New Tools Meant to Up Ad Inventory

Facebook’s primary source of income is its News Feed ads served to North American and European consumers. But that feed is getting “saturated” and it jeopardizes user retention and, therefore, continued growth in ad revenue, both Facebook officials and company observers say. So Facebook is adding capacity by creating a secondary News Feed, as well as continuing to put ads in front of Facebookers both on and off of the app.

Testing the theory on Monday, Target Marketing updated the mobile app on an Android smartphone in order to find the second News Feed that’s in beta testing. It didn’t show up.

So it appears as though Facebook hasn’t yet widely released the second feed that is expected to accomplish three of Facebook’s objectives: Create new ad inventory for marketers, new customers for publishers in the platform’s revenue-sharing model and the option for a wider world perspective for Facebook users who may have narrowed their perspectives to the point of what is commonly known as a “filter bubble” on life.

Many speculate the latter may have allowed “fake news” to proliferate and bitterness to prevail in user postings. [Author’s note: Last month, my News Feed congratulated me for saying something nice about friends or family members, as well as “loving” their posts. It seemed to be an effort to reward kindness.]

This worry about user retention through saturated ad load appears to be real. On July 20, a user complained that one out of seven of the posts in his feed were ads. Based on the congratulatory Facebook posts for basic human kindness, it appears as though the Great Facebook Unfriending of November 2016 that may have created many filter bubbles continues.

So here’s what Facebook appears to be doing to both keep users, and increase ad inventory and revenue:

Secondary News Feed

"We are testing a complementary feed of popular articles, videos and photos, customized for each person based on content that might be interesting to them," a Facebook spokesperson confirmed in April 2017 for cnet.com. "We've heard from people that they want an easy way to explore new content they haven't connected with yet."

Also in April, Cosmopolitan reported seeing rocket ship icons on iPhones that led to the second news feed and “explore” tabs on Androids that did the same. [Author’s note: While my Android didn’t show the “explore” tab, my Apple PC showed an “explore” menu option with a subhead of “Recent Ad Activity.” Clicking on that option revealed sponsored posts I’d clicked and ones I’d saved. It turns out, there are lots of things I didn’t know about Demi Moore.]

While Facebook’s comment to cnet.com doesn’t specifically say there will be ads in the secondary News Feed, it didn’t exclude the option, either.

Instagram, Audience Network and Other Ad Options

As Target Marketing reported in April 2016, Facebook C-suite was already urging marketers to explore advertising on its Audience Network (which targeted Facebook users elsewhere online), as well as Messenger.

“What we're seeing is [with] the results we're able to deliver on Facebook and Instagram, a lot of our marketing partners want more and our ability to do that is why we're investing in the Audience Network."

Recode reports on July 15 that Facebook can continue to grow ad revenue, even if it doesn’t gain eyeballs beyond the News Feed. But Facebook won’t grow as much — especially because half of the world’s remaining Internet users are in China, which isn’t permitting Facebook to enter its market. Recode continues:

“If Facebook can’t show people more ads in News Feed and can’t get unblocked in China, it needs to show them ads somewhere else. And that explains why, in the past six months, we’ve seen Facebook start to put ads in a lot more places.”

Here are the other places Recode’s noticed:

Mid-roll Video Ads: “And more importantly, it started funding video projects that could host those ads. It’s even paying video publishers to make TV shows for Facebook, a chance for more video ad inventory. [Reported in Target Marketing in January 2017 regarding mid-roll and in June 2016 regarding the content creation push.]

Ads Inside Instagram Stories. “It’s tough to tell how popular Stories have been on other Facebook platforms like Messenger, WhatsApp and Facebook itself, but presumably those Story ads will show up on other platforms, too.” [Melissa Ward of Target Marketing reported on Instagram Stories in August 2016]

Ads Inside Facebook Messenger, “and was in Cannes to sell and educate ad buyers on Messenger ads just last month.” [Target Marketing, April 2016]

Facebook Started Testing Ads in Marketplace, “its Craigslist-style shopping section for buying or selling used goods, yesterday. It’s just a test for now, but yet another place Facebook is hoping to find more ad inventory.” [Author’s note: Perhaps this is only a test at this point because, as Target Marketing reported in October 2016 in “Sex, Guns, Babies for Sale on Facebook,” Marketplace is a bit more of a democratic space on Facebook than perhaps is true of News Feed.]